Why SentinelOne’s AI-Powered Cybersecurity Model is a Buy for Long-Term Growth in a High-Demand Sector

The cybersecurity landscape is undergoing a seismic shift as artificial intelligence (AI) becomes the linchpin of modern threat detection and response. SentinelOne (NYSE: S), a leader in endpoint protection, is capitalizing on this transformation with its AI-powered Singularity platform. With the global cybersecurity market projected to exceed $300 billion by 2025 and AI-driven cybersecurity alone expected to grow at a 27.8% CAGR to $81.89 billion by 2029 [1], SentinelOne’s strategic focus on AI integration positions it as a compelling long-term investment.

Strong Financials and AI-Driven Differentiation

SentinelOne’s Q3 2024 results underscore its durable growth trajectory. The company reported $210.6 million in revenue, a 28% year-over-year increase, and Annualized Recurring Revenue (ARR) of $859.7 million, up 29% year-over-year [2]. Notably, its ARR growth outpaced the 24% expansion in customers with $100,000+ ARR, reflecting a mix of new customer acquisition and upselling to larger enterprises [3]. CEO Tomer Weingarten highlighted the launch of “Purple AI,” an AI-driven threat detection and response system, as a key differentiator. He emphasized that Singularity’s AI capabilities enable enterprises to “modernize their endpoint security and adapt to evolving threats” [4], a critical advantage in a sector where 68% of organizations now prioritize AI-based solutions [5].

CFO Dave Bernhardt added that the company’s net income margin improved to -5%, signaling progress toward profitability [4]. This is significant given the sector’s typical focus on growth over immediate profitability. SentinelOne’s ability to balance expansion with margin improvement—while competitors like CrowdStrike and Palo Alto Networks face valuation pressures—strengthens its appeal.

Undervaluation in a $300B+ Market

Despite its robust performance, SentinelOne trades at a P/S ratio of 6.30, below its peer group average of 8.10 but above the broader software industry average of 4.91 [6]. This suggests the stock is undervalued relative to its growth potential. Analysts note that the company’s P/S ratio is near a 5-year low, even as it raised full-year revenue guidance to $818 million (32% growth) and expects ARR to surpass $1 billion in Q2 2026 [7].

The valuation becomes even more compelling when contextualized against the AI-driven cybersecurity market’s explosive growth. SentinelOne’s Singularity platform, which integrates AI for real-time threat detection, is directly aligned with the sector’s $30.68 billion 2025 market size [1]. With AI adoption accelerating—driven by generative AI threats and regulatory demands for proactive security—the company’s first-mover advantage in AI-powered endpoint protection could translate into outsized market share gains.

Strategic AI Expansion and Competitive Edge

SentinelOne’s AI strategy extends beyond endpoint security. The acquisition of Prompt Security in 2024 has bolstered its GenAI security capabilities, addressing a $234.64 billion projected market by 2032 [1]. Additionally, the launch of SentinelOne Flex—a flexible licensing model—positions the company to capture larger enterprise contracts with longer-term commitments [7]. These moves contrast with competitors who remain heavily focused on traditional endpoint solutions, giving SentinelOne a multi-vector growth engine.

The company’s non-GAAP operating margins turned positive at 2% in Q2 2026 [7], a sign that its AI-driven efficiency gains are starting to offset R&D investments. While GAAP operating margins remain negative (-33%), the shift toward profitability is a critical inflection point for a stock historically criticized for its lack of margin visibility.

Risks and the Path Forward

SentinelOne’s path to long-term success is not without risks. The cybersecurity sector is highly competitive, with rivals like CrowdStrike and Microsoft investing heavily in AI. Additionally, the company’s forward P/E ratio of 68.92 [7] reflects market skepticism about near-term profitability. However, its strong revenue growth, expanding ARR, and leadership in AI-driven security mitigate these concerns.

Conclusion

SentinelOne’s AI-powered cybersecurity model is a rare combination of strategic foresight and operational execution. In a $300B+ market where AI is no longer a luxury but a necessity, the company’s 28% revenue growth, 29% ARR expansion, and innovative AI integrations position it to outperform peers. At a P/S ratio of 6.30, it offers a compelling entry point for investors seeking exposure to the AI cybersecurity boom. As Weingarten noted, “The future of security is AI, and SentinelOne is leading the charge.” For long-term investors, the question isn’t whether the market will grow—it’s whether SentinelOne can maintain its leadership in this high-demand sector.

Source:
[1] AI In Cybersecurity Market Report 2025, Share & Analysis [https://www.thebusinessresearchcompany.com/report/ai-in-cybersecurity-global-market-report]
[2] SentinelOne Announces Third Quarter Fiscal Year 2025 Financial Results [https://investors.sentinelone.com/press-releases/news-details/2024/SentinelOne-Announces-Third-Quarter-Fiscal-Year-2025-Financial-Results/default.aspx]
[3] SentinelOne Q3 2024 Earnings Analysis [https://sergeycyw.substack.com/p/sentinelone-q3-2024-earnings-analysis?action=share&utm_content=share&utm_medium=email&utm_source=substack]
[4] SentinelOne (S) Q3 2024 Earnings Call Transcript [https://www.fool.com/earnings/call-transcripts/2023/12/05/sentinelone-s-q3-2024-earnings-call-transcript/]
[5] Artificial intelligence (AI) in cybersecurity - statistics & facts [https://www.statista.com/topics/12001/artificial-intelligence-ai-in-cybersecurity/]
[6] What Recent Price Rebound Means for SentinelOne Stock [https://simplywall.st/stocks/us/software/nyse-s/sentinelone/news/what-recent-price-rebound-means-for-sentinelone-stock-valuat]
[7] Is SentinelOne (S) a Buy After Strong Q2 Earnings and ... [https://www.ainvest.com/news/sentinelone-buy-strong-q2-earnings-guidance-balancing-growth-profitability-valuation-competitive-cybersecurity-landscape-2508/]